Job Watch: Trends in Jobs and Establishments

Keeping pace with the nation’s economy, Indiana had a net gain of
39,593 jobs (1.4 percent) between the third quarter of 2003 and the third
quarter of 2004, according to recent figures from the Indiana Department of
Workforce Development (see Table 1).

Indiana’s industry growth leader was administrative, support and
waste management. Employment placement agencies, telephone call centers, landscaping
services, and convention and trade show organizers are just a few of the industries
contained in this broad grouping. The state experienced a net gain of 12,076
jobs in this sector and its growth rate nearly doubled that of the nation’s.

Is growth in this sector experienced by a majority of counties or concentrated
in a handful? Marion County contributed more than half of the jobs (6,834
jobs), but approximately two-thirds of the state had growth in the administrative,
support and waste management sector (see Figure 1).

Business Trends

Although jobs are a key piece in the state’s economic picture, business
formation is perhaps of equal importance. From 2001 to 2002, Indiana had a
net increase of 1,724 businesses (1.2 percent), growing slightly slower than
the nation. On a percentage basis, Indiana grew faster than all of its immediate
Midwestern neighbors, and on a numeric basis, only Illinois had a greater
net increase (see Figure 2).

In 2002, 49.7 percent of the state’s businesses employed one to
four people. That percentage may seem fairly high but 48 states had a
greater percentage of their establishments in this size class. It appears
that this business size class has been fairly stagnant in terms of its
share of total establishments since 2001. Perhaps some people, who might
have formed a business with a few employees, are taking into consideration
the cost of having employees on one’s payroll, and are opting in
this age of technology to become self-employed instead. Figure
3 indicates that the growth in nonemployer establishments in
the state (also considered self-employment) is picking up the pace. However,
if self-employment can be tied to innovation and the opening of new revenue
streams for the state, then the state could stand some improvement, considering
it ranks 38th in the nation in percentage point increase.

The nation as a whole experienced a net increase of 105,468 businesses
(see Figure 4). Losses in the number of establishments
with 50 employees or greater were offset by gains in the number of establishments
with fewer than 50 employees. Indiana and its Midwestern neighbors experienced
a similar scenario where the stimulus for growth in the number of businesses
came from businesses that employ less than 10 people.

Amber Kostelac
Data Manager, Indiana Business Research Center,
Kelley School of Business, Indiana University